Oil and gas lobbyist pushes revised Ohio drilling tax

The proposal would raise the severance tax rate on horizontally drilled wells by 1 percent, then 2 percent, while rolling back similar taxes on traditional wells.

Julie Carr SmythThe Associated Press

A top lobbyist for Ohio's oil and gas drilling industry urged state lawmakers Wednesday to support a package of tax revisions advanced as an alternative to an earlier plan by Republican Gov. John Kasich.

At a packed hearing before the House Ways and Means Committee, Ohio Oil and Gas Association executive vice president Tom Stewart expressed support for a tax bill introduced last month.

The proposal would raise the severance tax rate on horizontally drilled wells by 1 percent, then 2 percent, while rolling back similar taxes on traditional wells.

The plan would exempt drilling companies subject to the new tax from Ohio's main business tax, called the Commercial Activity Tax, and makes other adjustments.

Critics say Ohio's drilling taxes would still be too low, given the money to be made through natural gas-rich shale deposits made newly available in recent years through advances in high-pressure hydraulic fracturing, which involves horizontal drilling.

Stewart said the new proposal is constructed to encourage gas exploration, environmental protection and regulatory reform without scaring off drillers.

He said it's important to bring certainty to the state's drilling industry, repeatedly rebutting suggestions that the energy companies that have blanketed shale-rich regions of eastern and southern Ohio in recent years won't be deterred no matter how high the taxes.

"This concept that people must come to Ohio, must stay in Ohio, is simply not accurate," he said.

The current bill, backed by Republican House Speaker Bill Batchelder, is presented as an alternative to a proposal last year by Kasich that would have raised the severance tax on oil and gas drilling and used the proceeds for a modest statewide income-tax reduction.

Kasich included the tax proposal in last year's state budget bill, but Batchelder and his chamber stripped it out.